Updates to Federal Employees’ Compensation Act (Workers’ Compensation)
GUIDE FOR BASIC ACCOUNTING AND REPORTING
Updates to Federal Employees’ Compensation Act (Workers’ Compensation)
Effective Date: Fiscal year 2013
Prepared by:
UNITED STATES STANDARD GENERAL LEDGER ADVISORY DIVISION
GOVENRMENTWIDE ACCOUNTING
FINANCIAL MANAGEMENT SERVICE
U.S. DEPARTMENT OF TREASURY
Version Number / Date / Description of Change / EffectiveUSSGL TFM / Effective Date
1.0 / Updated Version – Updated earlier version / FY 2002
2.0 / 5/ /2012 / Updated Version incorporating DOL’s accounting transactions using new USSGL accounts. / S2-12-03 / FY 2013
DRAFT USSGL Proprietary and Budgetary Account Attribute Table[1]
USSGL Account / USSGL Account Attributes / Bulk File AttributesNo. / USSGL Account Title / Normal Bal. Ind. / Budge/
Prop / Anticipated / Debit/
Credit / Begin/
End / Fed/
NonFed / Trading
Partner / Trading Ptnr Main / Exch/
Nonexch
132100 / Unfunded FECA Benefit Contributions Receivable / D / P / N / D / B/E / F / ### / #### / *[2]
540500 / Unfunded FECA Benefit Revenue / C / P / N / C / E / F / ### / #### / X
540600 / Contra Revenue for Unfunded FECA Benefit Revenue / C / P / N / D / E / F / ### / #### / X
DRAFT USSGL Proprietary and Budgetary Account Attribute Table - Continue
USSGL Account / TAS AttributesUSSGL Account Title / Fund Type / Reporting Type Code / TAS Status / Trans Code
132100 / Unfunded FECA Benefit Contributions Receivable / EG / U / U / N
540500 / Unfunded FECA Benefit Revenue / EG / U / U / N
540600 / Contra Revenue for Unfunded FECA Benefit Revenue / EG / U / U / N
Crosswalk Impact
USSGL Account Number / Balance Sheet / Net Cost / Net Position / Custodial Activity / P&F/SF133 / SBR / 2108 / Reclassified Balance
Sheet[3] / Reclassified Net Cost3 / Reclassified Net Position3
132100 / Line 3 / N/A / N/A / N/A / N/A / N/A / N/A / Line 2.2 / N/A / N/A
540500 / Line 33 / Line 2 / N/A / N/A / N/A / N/A / N/A / Line 9.1 / Line 11.1 / N/A
540600 / Line 33 / Line 2 / N/A / N/A / N/A / N/A / N/A / Line 9.1 / Line 11.1 / N/A
Background:
Federal Employees’ Compensation Act (FECA) is administered by the Department of Labor (DOL), Office of Workers’ Compensation Programs (OWCP). FECA provides income and medical cost protection worldwide for job-related injuries, diseases, or deaths of civilian employees of the Federal Government through a special benefit fund called the Federal Employees' Compensation Fund. The Employees Compensation Fund consists of reimbursements for benefits from insured worker’s employing agencies and annual appropriation from the General Fund of Treasury.
The FECA fund pays benefits on behalf of Federal entities as costs are incurred and bills the entity annually before August 15 for the costs incurred during the previous 12-month period ended June 30 (July 1 – June 30). Federal entities fund the FECA payments through appropriations reimbursed to the FECA fund. For those agencies that have funding though appropriation, each entity shall include in its annual budget estimates for the fiscal year beginning in the next calendar year a request for an appropriation for the amount equal to the costs (approximately 15 months). Once the appropriation is received, the payments are due to DOL within 30 days.
There are 4 different types of FECA payment activities:
a. Appropriated Agencies under 2-year cycle
b. Non-appropriated Agencies
c. Non-billable agencies
d. Prepayment by Agency
This guidance will address the most common FECA payment activity, appropriated agencies under 2 year cycle. The USSGL may provide additional guidance on other FECA payment activities in the future should there be a need.
FECA Liability:
Workers’’ Compensation claims are submitted to, and approved by, the DOL. DOL pays the claim holders. DOL then prepares a chargeback billing to the responsible agencies. Public Law (PL) 93-416, Section 8147 (the FECA law) essentially gives agencies funded by appropriation 2 years to pay the chargeback bill; thereby allowing time for applicable amount to be included in budget submissions. Therefore, there should be an unfunded liability reported in the agencies’ books for these 2 years (bills are for periods July 1 – June 30), plus an accrual for the 4th quarter of the current FY. This amount must be split into a current portion for the amount to be paid in the next FY and a non-current portion for the remaining amount. Pursuant to the FECA law, once funding is received the FECA chargeback bill should be paid within 30 days. FECA chargeback bills that are still outstanding after the 30-day period are considered delinquent and should be reflected as a funded liability with a footnote disclosure.[4]
FECA Actuarial Information:
The FECA Actuarial liability includes the expected liability for death, disability, medical, and other approved costs. It is estimated using the paid-loss extrapolation method. This method uses historical benefit payment patterns related to a specific incurred period to predict the entire payments related to that period. The payments are discounted to present value.
The DOL sends each agencies the actuarial liability estimates for future worker’s compensation benefits amounts for both the current and prior years. The current figure is what the new balance in the Actuarial FECA Liability Account (2650) should be after the source data (DOL information) journal voucher entry is completed by the entity. This entry represents a change in accounting estimate, and is strictly proprietary, as actuarial liabilities are unfunded.[5] The expense is determined by comparing the current-year amount to the prior-year amount.
Journal Voucher Entry Support:
The following support must be included with the Actuarial FECA Liability entry:
- The DOL Memorandum for Chief Financial Officers of Executive Departments and Agencies, which contains the actuarial balances.
- Agency-Wide Financial Statements Directorate allocation spreadsheet reflecting the percentage allocation to the entity level.
- A copy of the last three annual chargeback bills for the department level.
Questions and Answers for Paying agencies with Permanent Indefinite Authority.
Question: Can a paying agency with permanent indefinite budget authority always record a FECA liability as funded?
Answer: No. Although an agency may have a permanent indefinite appropriation, the Treasury Appropriation Fund Symbol must have budgetary resources available for the FECA obligation as of end of the fiscal year and must be apportioned (if applicable) in order to record a budgetary account payable.
Question: Can a paying agency with permanent indefinite budget authority record a FECA liability as funded where its Treasury Appropriation Fund Symbol has budgetary resources available for obligation as of the end of the fiscal year but the FECA chargeback bill is budgeted for a subsequent fiscal year?
Answer: No, the paying agency with permanent indefinite budget authority should not record a budgetary account payable with the budgetary resources available for obligation as of the end of the fiscal year. As of the end of the fiscal year, the FECA liability would be classified as unfunded. In a future fiscal year, the agency would record the funded FECA liability for the period the FECA chargeback bill was budgeted.
Relevant References:
Per SFFAS No. 7, FECA transactions are considered exchange revenue.
320. Employer entity payments for unemployment benefits and workers compensation.—The employer entity recognizes a liability and an expense for Federal employees who are laid-off or injured on the job and are entitled under law to unemployment benefits or workers compensation, respectively.72 The payment to the former or current employee is made by the unemployment trust fund (Department of Labor) in the case of unemployment benefits and by the special benefits fund (Department of Labor) in the case of workers compensation. Unemployment benefits are reimbursed by the former employer entity; and workers compensation costs are mostly charged back to the employer entity.
321. Since the costs are recognized by the employer entity and its payment to the unemployment trust fund or the special benefits fund
reimburses these funds for the costs they incur, the amounts these funds receive from the employer entity are exchange revenues.
OMB Circular A11, section 32.2, How do I treat agency benefit payments under the Federal Employees’ Compensation Act?
For accounts subject to appropriations action, include in your budget year estimates the amount billed by the Employment Standards Administration (Office of Workers’ Compensation Program) of the Department of Labor for benefits paid on behalf of employees of your agency in the past year under the Federal Employees’ Compensation Act.
For accounts not subject to appropriations action, you must pay the bill in the current year.
Assumptions Used in This guidance:
1) Department of Labor’s 016 1521 is a no year fund.
2) DOL uses FECA reimbursements from agencies to pay for the FECA claims filed by the injured employees. DOL will use this resource to pay the FECA claims. For the purpose of this illustration, assume agency 040’s reimbursement is used to pay agency 30’s employees. Agency 040 was chosen for illustrative purpose only.
3) Agency codes 030 and 040 are fictious agency code. They are used to illustrate partner codes in this guidance.
4) Assume agency 030 is a newly formed agency and it started its operation in Year X1.
5) Agency 030 receives a chargeback in Year X2 for actual FECA payments made by DOL on behalf of Agency 030 from Jul X1 – June X2. Assume DOL did not pay FECA claims to agency 030 employees prior to Oct 1, X1(fiscal year X2).
6) To simplify the FECA illustration, agency 030 will not have any other activity recorded except FECA related activities.
7) Assume agency 030 FECA reimbursements to DOL is paid out from a multi year fund which is also mandatory program.
New USSGL Accounts
Account Number: 132100
Account Title: Unfunded FECA Benefit Contributions Receivable
Account Definition: The amount recorded by the Department of Labor for unfunded FECA contributions due from Federal employers. Until the Federal paying agency records the actual budgetary obligation, the associated FECA liability and receivable are considered unfunded. This account does not close at yearend.
Normal Balance: Debit
Justification: To assist agencies with interagency reconciliation of benefit programs.
Account Number: 540500
Account Title: Unfunded FECA Benefit Revenue
Account Definition: The amount of unfunded FECA accrued revenue recorded by the Department of Labor due from Federal employers.
Normal Balance: Credit
Justification: To assist agencies with interagency reconciliation of benefit programs.
Account Number: 540600
Account Title: Contra Revenue for Unfunded FECA Benefit Revenue
Account Definition: The amount reflecting a reduction in unfunded FECA revenue for a benefit program based on adjustments as stipulated by law.
Normal Balance: Credit
Justification: To assist agencies with interagency reconciliation of benefit programs.
Changes to Existing Accounts:
Account Number: 132000
Old Account Title: Employment Benefit Contributions Receivable
New Account Title: Funded Employment Benefit Contributions Receivable
Old Account Definition: The amount recorded by administering agencies for contributions due from Federal employers and/or covered employees for employment related benefits such as retirement, health insurance, life insurance, Federal Employees’ Compensation Act, and unemployment compensation. This amount excludes Social Security taxes. This account does not close at year-end.
New Account Definition: The amount recorded by administering agencies for funded contributions due from Federal employers and/or covered employees for employment related benefits such as retirement, health insurance, life insurance, Federal Employees’ Compensation Act, and unemployment compensation. This amount excludes Social Security taxes. When the Federal paying agency records the actual budgetary obligation, the associated FECA liability and receivable are considered funded. This account does not close at yearend.
Normal Balance: Debit
Justification: To assist agencies with inter-agency reconciliation of benefit programs.
Account Number: 540000
Old Account Title: Benefit Program Revenue
New Account Title: Funded Benefit Program Revenue
Old Account Definition: Revenue received by agencies administering retirement plans, insurance plans, and other annuity.
New Account Definition: The amount of funded revenue recorded by administering agencies for retirement plans, insurance plans, and other annuities.
Normal Balance: Credit
Justification: To assist agencies with inter-agency reconciliation of benefit programs.
Account Number: 5409
Old Account Title: Contra Revenue for Benefit Program Revenue
New Account Title: Contra Revenue for Funded Benefit Program Revenue
Normal Balance: Debit
Old Definition: The amount reflecting a reduction in revenue for a benefit program based on adjustments as stipulated by law. not including credit losses.
New Definition: The amount reflecting a reduction in funded revenue for a benefit program based on adjustments as stipulated by law.
Justification: To assist agencies with inter-agency reconciliation of benefit programs.
Listing of USSGL Accounts Used In This Scenario
Account Number / Account NameBudgetary
411900 / Appropriation Realized
420100 / Total Actual Resource Realized - Collection
421000 / Anticipated Reimbursements and Other Income
422100 / Unfilled Customer Order without Advance
425100 / Reimbursements and Other Income Earned - Receivable
425200 / Reimbursements and Other Income Earned - Collected
445000 / Unapportioned Authority
451000 / Apportionment
459000 / Apportionment – Antiicpated resources – Program Subject to Apportionement
461000 / Allotment
490100 / Delivered Orders – Obligations, Unpaid
490200 / Delivered Orders – Obligations Pd
Proprietary
101000 / Fund Balance with Treasury
132000 / Funded Employment Benefit Contributions Receivable
132100 / Unfunded Employee Benefit Contributions Receivable
221500 / Other Post Employment Benefits Due and Payable
222500 / Unfunded FECA Liability
265000 / Actuarial FECA Liability
310000 / Unexpended Appropriation
310100 / Unexpended Appropriation -Appropriation Received
310700 / Unexpended Appropriation Used
331000 / Cumulative Results of Operations
540000 / Funded Benefit Program Revenue
540500 / Unfunded Benefit Program Revenue
570000 / Appropriation Used
640000 / Benefit Expense
685000 / Employer Contributions to Employee Benefit Programs Not Requiring Current-Year Budget Authority
760000 / Changes in Actuarial Liability
Beginning Trial Balance